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Census Data Reveals 'Two Americas' Within The U.S.

The two wispy slips of paper were far more than just ATM receipts found at a bank in New York. They created a jarring yet simple mosaic of the sprawling gap between rich and poor in the United States.

Jim Edwards evaluates two very different ATM receipts on Business Insider.

“They show that someone recently withdrew $300 in cash on a balance of $1 million, just after someone else tried to withdraw $100 on an account that had insufficient funds,” Business Insider noted Tuesday. “Extreme, fixed, inequality is a recipe for disaster in a society that claims to be democratic and socially fluid.”

Putting Money on the Line

The starkest contrast in American income inequality could be right where those ATM receipts turned up, according to a study of U.S. Census Bureau data by The New Yorker. Any given subway commuter’s median household income is likely to drop precipitously once he or she has shuffled off Manhattan.

“If the borough of Manhattan were a country, the income gap between the richest 20 percent and the poorest 20 percent would be on par with countries like Sierra Leone, Namibia and Lesotho,” according to The New Yorker. “Along individual subway lines, earnings range from poverty to considerable wealth.”

Line 2’s Park Place and Chambers Street stations cater to the most affluent commuters with $205,192 in median household income. Farther up that line, the Bronx’s E 180 Street station services commuters with a median household income of $13,750 — just $1,462 more than the station serving the city’s poorest commuters.

Households Still in Crisis

Such an income disparity may be tough to imagine this far out from the financial crisis. But households with less than $500,000 in net worth are still in the thick of recession, according to a recent study by the Pew Research Center.

These households lost almost 5 percent of their wealth between 2009 and 2011, while the wealth of those on the other side of $500,000 rose more than 20 percent, the Washington-based think tank’s study found. Stock and bond market rallies returned lost wealth to the top 13 percent of American households, and sinking home values continue to scuttle the rest.

Of course, not everyone thinks that the people in either America are trapped, or “fixed,” in that position. Nor does everyone agree with the veracity of the figures.

U.S. Census data indicates a tremendous disparity in median household income, as shown by The New Yorker.

“Almost invariably, such widely publicized statistics leave out both taxes on people in upper income brackets and transfers to people in lower income brackets,” Thomas Sowell wrote in Economic Facts and Fallacies. “When they fail to follow given individuals over time, they exaggerate lifetime inequality, as well as enabling observers to speak of people who are transiently in various income brackets as if they are enduring ‘classes.’”

Paradox-Induced Paralysis

But income inequality has surged dramatically over the last four decades, according to The New York Times on Sunday.

U.S. Census data indicates a tremendous disparity in median household income, as shown by The New Yorker.

“In 1970, the richest 1 percent of Americans enjoyed 9 percent of total national pre-tax income,” NYT stated. “In 2011, by contrast, that share had risen to 19.8 percent.”

Meanwhile tax rates for the highest echelon of taxpayers have tumbled, and American voters have lost faith in partisan politicians’ ability to control the situation.

“It seems like a paradox,” NYT stated. “Americans are increasingly worried about the gap between rich and poor, but are hesitant to have the government do anything about it.”

Creating Value

But a wide gulf between dirt poor and filthy rich doesn’t benefit either party in the long run, according to Business Insider. That’s because meager wages are a recipe empty wallets — and people with empty wallets don’t spend a lot of money, which adversely affects rich people’s ability to get richer.

“The best way to fix inequality is to persuade the overlords that it is in their best interests to share more of their wealth by paying their employees more for their hard work (work that, not incidentally, is what makes the overlords rich),” BI’s Henry Blodget wrote. “Persuade companies that it’s better to focus on creating value rather than just profit.”

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Derek – I need to respectfully debate your post. Your analysis is based on a flawed premise. Someone should not simply take two random ATM receipts and come to sweeping conclusions about the overall state of the wealth in America.

When I was in school, and for at least a few years afterwards, you could have viewed my ATM receipt and thought I was part of “poor America”. While statistically I may have been classified as poor, I never felt that way. All this time I was working hard and striving to better my life. However, it didn’t mean I was completely responsible for money management yet.

One receipt may have belonged to someone just starting out. The other to someone who has worked hard and saved his entire life and is about to purchase their dream vacation home.

I also disagree with your conclusion that the solution is to make the wealthy pay their “fair share”. If you think that the average “wealthy American” (someone making $205,192 in your analysis) doesn’t pay their share of taxes, you are sorely mistaken. By the time you get done adding up federal income tax, state income tax, local taxes, social security, Medicare, property taxes, gas taxes, sales taxes, and other hidden taxes (such as the cost of an airline ticket), it is estimated that up to 59.7% of one’s income can be consumed by taxes. The top 10% of income earners pay 68% of all federal income tax.

While I agree that more opportunities need to be created to raise the income levels at the lower end, punishing one group of people is not the way to achieve this. Income equality should not be the objective. Opportunity equality should be. There will be those who grab these opportunities, and those who do not. People should be incented to take these opportunities, not discouraged. And those who choose not to should not be rewarded for making that choice.

Thank you for putting so much thought into your comments, Mark. You’re absolutely right about drawing too broad a conclusion from such a tiny sample size.

That’s why I only used the ATM receipts as two tiles in an intricate mosaic. My conclusions stemmed from the U.S. Census Bureau data and Pew Research Center study that I cited in the post.

You’re right about university students looking poor on paper, which is why I quoted Thomas Sowell’s warning about oversimplifying fixed class affiliation. However, I would warn against ignoring the millions of other people who are perpetually stuck in their class.

Unfortunately the data seems to be inconclusive on class mobility. I’ve seen it cited both ways.

We’ll have to disagree on the taxes though, Mark. Wealthy citizens enjoy more benefits of our democratic republic without proportionally contributing to it via military or civil service, so they should pay a higher tax rate than those who make less money.

After all, public investment in infrastructure benefits corporations, which encourages investment. American military superiority and our robust justice system — both paid for by taxes — also foster wealth creation.

So I don’t see higher tax rates as punishment. I see them as a civic responsibility.

To be sure, not everyone agrees that income inequality is even a problem. But if it is a problem, it is certainly complex, requiring many cooperating solutions.

The analysis that someone else has to pay more so those without liquid assets don’t is flawed by the personal decisions one makes in their life.

My main concern with this article is that I have more cash than people that have better toys (cars, cellphones, etc) than I do. I look wealthier on paper because I haven’t spent my money on momentary thrills. Instead I have invested in my future through the purchase of stocks, education, etc.

If I am to give up money so others don’t have to, I should have a say in what it is those others get, otherwise I am just paying for them to not invest in their future.

Thanks for weighing in. It can be infuriating to watch government reward people who do not exercise personal responsibility, but I like that they paid sales tax on their toys.

They also paid income tax on the cash they used to purchase those toys, which shouldn’t affect your wisely saved cash. I’d say you’re smart for investing your money in a retirement portfolio — and I’m guessing you’d have an opinion on the capital gains tax. =)

“We’ll have to disagree on the taxes though, Mark. Wealthy citizens enjoy more benefits of our democratic republic without proportionally contributing to it via military or civil service, so they should pay a higher tax rate than those who make less money.” There are a couple of things wrong (so wrong) here and this shows your ideology is leading you to draw biased conclusions from the data.

First you assume that wealthy people have not served in the military – you should read a new report titled “Who Serves in the U.S. Military? The Demographics of Enlisted Troops and Officers”. It was compiled by Shanea J. Watkins and James Sherk at the Heritage Foundation’s Center for Data Analysis. The Heritage Foundation’s imprimatur will raise skepticism with you, but the facts from the military data are very compelling. Just to pick the data point that addresses your comment, 50 percent of the enlisted recruits (i.e., not including the officers’ corps) come from families in the top 40 percent of the income distribution, while only 10 percent come from the bottom 20 percent.

Now, let us consider the contribution to society. The top 10% of wage earners – over $112,000 per year – pay 70% of the income taxes collected by the government (up from 55% in 1986). The top 50% (which includes the military recruits above) pay 87% of the Federal Income Taxes. In the latest 2013 data from the IRS, 47% of people paid no Federal Income Tax (there’s that inconvenient number again!). So who is it again that is paying for infrastructure? Not to mention that most of our infrastructure was built in the past, when the top marginal rate approached 75% (sometimes higher) on top wage earners. As an apparent journalist, you should get outside of the “1%” rhetoric you appear to sympathize with and actually look at the data if you are going to write a story like this.

Shall we also look at what the “rich” give to charity and the arts? A recent study by the Chronicle of Philanthropy found that Households with incomes of $50,000-$75,000 donate on average 7.6 percent of their discretionary income. That’s compared with about 4 percent for those with incomes of $200,000 or more. Now, you say, the middle class is giving a bigger percentage – but that is deceptive, as the raw dollars for 4% of $200K is equal to $8,000 in giving while the higher 7.6% of $75K is $3,000 in giving. Also the study shows that Red States contribute much more than Blue States and that wealthy people who live in poor areas give a much larger percentage to charity – as well as giving their time. I also think you should look at what Mr. Obama and Mr. Biden contributed to charity (and look at Obama before he took office – Biden hasn’t changed, he gives bupkis).

Now, all of that came from a guy in 30 minutes who got up one morning and read your article. Do you think you could perhaps put in a little more time in writing the article to come up with some, you know, actual data rather than writing something to suit your ideology?

“In 1970, the richest 1 percent of Americans enjoyed 9 percent of total national pre-tax income… In 2011, by contrast, that share had risen to 19.8 percent. Meanwhile tax rates for the highest echelon of taxpayers have tumbled”

Most rich people have a lot of control over whether they report income. In the 1970s people talked about tax shelters at cocktail parties. Now, they don’t. Rich people report more income now that they are penalized much less for doing so; that doesn’t mean the actual amount of money at their disposal has gone up commensurately.

The problem goes deeper than money. There are two distinct large groups with a smaller group in the middle.

There are those who are willing to work very hard, stay in school, get their hands dirty, study physics and calculus, leap at opportunity, save, scrimp, do without, only buy what they need and become “rich”.

On the other end are those who live for the moment, don’t want to be bothered with hard schooling or doing homework, won’t accept challenges drop out of school and spend every penny they have and end up “poor.”

The group in the middle is willing to do some work and get by.

We are victims of ourselves. You can see it all around you, people who expect to have someone take care of them and cover their laziness. I was apalled to see a sign in a national chain department store that stated “it’s okay to be smart”.

Romney’s so called gaffe regarding the 47% that don’t pay any federal income tax illustrates the point. 47% aren’t willing to work hard enough or do what is necessary to get ahead. By their own hand millions are making themselves poor.

I speak as the first person in my family to ever go to college, who worked full time while in school full time, and who took 7 years to get a BS from an engineering school. I have a masters degree now, a job, own my house and have some money in the bank. I also have the bruises and dirty fingernails from digging my way to being “successful”. Literally, if I can anyone can. As a nation we need to stop wining about things and roll up our sleeves, especially those who have less. Otherwise, we will only be another bump in the road of history.

This strikes me as phony , despite the habit of democratic capitalism (the 2 being inseparable) having a partiality for chasing the best price (including for wages)), which we all are chasing. Except for some this rabbit chase around the track is via big government coercions stealing from the successsful private businessperson.

This strikes me as phony , despite the habit of democratic capitalism (the 2 being inseparable) having a partiality for chasing the best price (including for wages)), which we all are chasing. For some this rabbit chase around the track is via big government coercions stealing from the successsful private businessperson.

I also meant to say (before the clumsy comments technology here began to push me around, suppose we should feel “grateful” anyway) that every businessman knows the truism of Henry Ford: you must pay an adequate wage the market will bear so that your emplyees can also become your customers, …sort of like Paul Newman’s salad dressing promo likes to say: ‘we take the money and then give it back again’….It’s called “the multiplier effect,” dummies!

A few things to note about rich and poor. First, there is a huge disparity in cost of living across the country. $205k a year in Manhattan lives worse than half that much in Indiana. What sized yard can one buy in Manhattan for that income? There is also a big difference in the type of rich and the type of poor.

The group that pays the highest percent of their income on taxes are the business and professional class, those with household incomes between $180k and $3M per year. People in higher and lower incomes pay less. It also turns out that is the group that contains our doctors, lawyers, small business owners, and others who work the hardest. The hazard is, if they stop working, they fall fast.

On the low end, there are those who are perpetually poor due to laziness or choices of addiction and that propagates through generations. In fact, 70% of the children in America labeled to be poor would not be, if only their mothers were to marry their fathers. With the headline of the two Americas, one could just as well say the two are the married with intact families and the unmarried with people coming and going. The economics will line up.

The other thing left out about the so-called poor, is that they do not have to do anything for their standard of living to improve. Cell phones, cars, air conditioners, tv’s were all once the club of the upper middle class, and now the poorest have these things. The biggest problem of American poor is not their lack of money, it is their obesity. The truly poor people of the world spend over half their income on food, and face starvation. American poor often spend none of their own money on food and face diabetes, heart attacks, and other fat-related problems.

Everyone in the US has a choice to do better, because everyone can find some kind of education for free or nearly so to improve his skills. If we want to look a barriers, we should look at public schools that force kids with potential into bad schools. The answer of course if school vouchers for every child good at any school. That simple concept will enable millions to be the best they can be.

I have asked this question on numerous site multi numerous times and get no answers…so, here goes:

The “rich”, “wealthy” pay the majority of taxes in America….but, you say they should pay more?

Then, what precisely, with specificity can you do with the 47% of the population that pay zero or some sales taxes and no income taxes but get thousands in EIC credits? A large percentage of these people don’t even do the EIC, unless the law changed. However this large percentage also get rent, utility, cell phone subsidies…free medical care through Medicaid…food stamps and free time on the cell phones they sell for drugs or hi end purses. What do you do?????? And, they want jobs. So, what do you do?

Over the course of our 40 years of marriage we have lived at a range incomes from starving student to established corporate attorney with a couple of retirement pensions earned. None of the income I earn now is making someone like I used to be any poorer. Specifically it does not make my adult children poorer. To the contrary, I have been able to act as a safety.net for them, providing assistance more helpful than unemployment insurance. I have started to employ my oldest grandson. I also am able to donate funds through my church that aid people in acute need as well as pay the expenses for utilities and maintenance of a resource that.is.used by people of all income levels. When I buy the things I need, from hamburgers to cars, I provide income to people at all levels. The measure of the fairness of what I earn is the value of my services to my employer, not a numerical ratio to what is earned by an unskilled day laborer. So long as he is paid according to the value of his services, and is free to earn more through education, accumulated experience, and reliability, just as I did, he is being treated fairly.

No one ever criticizes celebrities for their high.incomes, which often have no relationship to level of effort or any intrinsic value of their work. After all the entertainers and sports figures and authors are giving back from their earnings , the fact that it makes no difference in the income if e poor will be more obvious.

Even things out and give the poor underprivileged $500,000 each and in a year the poor underprivileged will be poor and underprivileged again. It’s not the fault of hard working Americans that have made something of themselves that the lazy uneducated folks don’t have much. The sad part is that the Democrats want them to stay the way they are. Guaranteed Liberal voters. Share, share, gimme, gimme. Sickening!!!

Just another Keynesian Liberal spewing out angry opinions of inequality that are completely false. Think back to 1970…did everyone have flat screen tv’s, cell phones, healthcare, a car, a place to live, and food to eat? No. They didn’t. But today, everyone has it. The rich may have bigger houses and cool toys today, but the poor seem to have just about every amenity that life has to offer. The backlash is coming…..taxpayers are sick and tired of paying for everyone else. It doesn’t matter how rich you are. If you have to pay for all of the deadbeats to have every luxury in life, you’re going to get sick of it.

I’m going to have to agree with Mark on this one. There never will be income equality, ever. The whole concept of income equality, just like social justice, is a pipe dream created by someone who coveted what others had and who created a mechanism to claim it for themselves.

Societal discussions must involve all aspects of that society and social norms. In this conversation, the first step is to segregate those who produce wealth, and those who consume wealth. In the private sector, the value of someone’s compensation is based on their ability to help the organization earn a profit. Without the incentive of profits, why would anyone attempt to build a business in the first place?

In the private sector, generally speaking, the value of compensation is directly tied to the value of the participation. i.e., a small business is generally not going to make owners or employees rich, because the amount of profit is usually very small. The bigger the company, or corporation, the bigger the numbers thrown around and the higher likelihood of more employees within the organization becoming wealthy. A good example of this is Microsoft. When they began, Bill Gates and friends worked with meager means. After years of investment and work, they created one of the most profitable companies in American history, enriching many, many people.

In the public sector, compensation is generally determined by negotiations between labor unions and the government or jurisdiction. Public employees are consumers of wealth. They do not generate wealth. The bigger the government, the more wealth they are taking from the wealth producers. The more money taken from wealth producers, the less there is for non-governmental employees to build wealth of their own. Hence, resistance by wealth producers to give more of their wealth to the government in the form of taxes.

Non-profit organizations are also consumers of wealth. They are generally service providers who do not produce wealth. In that perspective, they are more aligned with the public sector than they are with the private sector. Many, if not all, non-profit organizations depend on charity to operate. That charity generally comes from one of two sources: private citizens who choose to distribute their wealth via charitable organizations; and the government who taxes wealth producers and redistributes that wealth in the form of mandated charity.

The bottom line is simple. The more obstacles placed in front of wealth producing organizations, coupled with the growth of government and non-profit organizations, leads to a reduction in wealth for all concerned. Why anyone would promote the growth of the latter without allowing for the growth of the former is beyond me. History has shown us time and time again that the ideologies of wealth redistribution and social justice have only lead to societal suicide. My question is, why do people continue to support and promote suicidal behavior?

Notice how Obama is redistributing the wealth to his crony friends. The black community is in worse shape under Obama. The fed is printing money, only to the benefit of Wall St. We are $17 trillion in debt. The poor are getting poorer, but Wash DC is the richest section of the US. It would be nice if GE and Google would pay their fair share.

“Overlords”? How medieval! Your communist class warfare bias is laughable. Last I heard, you get a good education, work hard, look for opportunities, and try to secure your own financial safety net. Those that don’t follow these rules will have poorer results. I have had bosses, and bureaucrats as well, who restrain my options, but I either live within their rules or take my game elsewhere.

Why cannot one EVER see a comparison of the Wealthy that pay the taxes to the social welfare recipients based on the Dollars of taxes paid as opposed to tax rates??? Who owes more to this country? the person who pays $100,000 in taxes or the social welfare recipient who pays in nothing? Who contributes more to his fellow man and the economy? the person who provides at risk capital for companies to exist and thus create jobs of the social welfare recipient who provides nothing? Why do those who constantly want higher tax rates on high earners never seem to advocate for a forced graduation from social welfare programs? Why are nearly all social welfare a lifetime entitlement as opposed to a hand up to gat someone through hard times while they get the education or training to get a job and be able to earn their way to a better life? How about we give all the economically disadvantages everything they could possibly want for twenty years then cut them off for the rest of their lives. Surely in twenty years they could become qualified to EARN a better life. Also why do we not spend any more money (I.E create jobs) to aggressively investigate welfare fraud and sentence the violators to life outside the welfare systems of this country for life. Then we wouldn’t need all those higher tax rates. God Bless America.

My ancestors came to this country in the latter 1600s on a boat that arrived in Philadelphia. My grandfather, father, and I have all served in the military. So I don’t say this as someone who has a disdain for America but I it still has to be said. America is on the decline and will continue to be. America was the land of opportunity and now it seems that the obligation has turned into the land of wealth distribution equality. What we owe citizens is an opportunity to make themselves successful. Some will do it and some will fail. The country cannot have an obligation to support those that try and fail, and those that never try and thus also fail. I’m not saying that there shouldn’t be countries that focus more on wealth equality – they exist. But that’s not America – we are the land of opportunity. Risk taking. Swing for the fences and have the chance to make it really big. The opportunity to have an opportunity exists for most but most squander it and that is their choice, but it’s not our job to pay them and feed them. I grew up in the midwest in a very middle class background. No six figure incomes in our family at all. I went to public school and I squandered a chance to go to one of the military academies because I made bad choices when I was younger. But I also got focused, put myself through college and now live in New York and am one of the 1%. I got no favors or strings pulled along the way, I just worked my butt off. When extra work needed to be done, I volunteered. I sought out mentors and asked them to help me. I know many others who have done the same. And I have NO desire to support lazy people who complain the system failed them and they want a handout. I don’t think it’s right and I don’t think it’s what America is about. What incentive exists anymore for the many lazy people who don’t want to take risk and who know they don’t have to because the government will feed them and their families? Come to America, take your shot and give it your best. If you fail, that’s life. There will be winners and there will be losers and there have to be. Unfortunately, America is now headed the way of a loser because it has changed from the land of opportunity to the land of handouts.

2) Higher Echelon tax rates have not decreased, they may pay less in taxes due to overseas investments, tax shelters, etc, but the tax rates have gone up, not down.

3) Income inequality is directly proportional to an education-motivation axis. Why has this even been an argument? The emotional argument of the haves and have nots, the rich don’t pay enough taxes because of blah, blah, blah……Typlical liberal drivel…..I have a Master’s Degree in Nursing; I did not get a raise when I finished grad school. I work for an exceptional company, love what I do and have never complained about the CEO driving a Ferrari. If I wanted to work harder, I too could have those things, I just choose to do what I love.

4) Don’t get me started on “civic responsibility”…….. but if you do, you might want to start with ethically correct journalism.